Starting out in your financial journey can be overwhelming, especially when experts recommend multiple “must-do” steps, like building a 6-month emergency fund, maxing out retirement contributions, investing in stocks, and advancing your education. With my first entry-level job, prioritizing all of these financial goals at once was not possible. While these money moves are ideal for long-term financial health, they may not be feasible for everyone, especially former athletes who are just transitioning out of sports and into entry-level jobs or facing debt. The key is to prioritize, make incremental progress, and build a foundation that works for your specific situation. Here are a few things to consider if you’re seeking a starting point.
Prioritizing Your Financial Goals After Sports
Assess Your Current Situation. The first step in tackling your financial goals is to understand where you currently stand. Are you in debt? What are your fixed expenses like rent, utilities, and groceries? Take time to track your spending and income for a month to identify areas where you might be able to save or redirect funds. This will help you prioritize your next moves based on your financial reality, not on the idealized standards thrown around by ‘experts’.
Build a Mini Emergency Fund. While the golden rule of saving six months’ worth of expenses sounds great, it can feel impossible if you’re starting with little savings or income. Instead of feeling paralyzed, start by aiming for $500 to $1,000 in an emergency fund. This smaller goal is more achievable and can still provide you with a financial cushion for unexpected expenses like car repairs or medical bills. Once you hit that mini-goal, you can begin increasing it over time.
Pay Down High-Interest Debt First. If you’re carrying high-interest debt, like credit card balances or payday loans, paying these down should be a top priority. High-interest debt eats away at your future savings and investments. Start with small amounts and pay more as your income increases. If your income is tight, explore side hustles or gig work, like driving for Uber or offering coaching services online, to help accelerate your debt repayment plan.
Contribute to Retirement (Even if it’s Small). Experts often say you should max out your retirement contributions (typically $22,500 per year in a 401(k)), but if you’re just starting out, this might be unrealistic. Instead, contribute what you can. Even a small percentage of your paycheck can make a significant difference over time due to compound interest. If your employer offers a match, prioritize contributing enough to get the full match—it’s essentially free money. As your income grows, you can increase your retirement contributions gradually.
Invest in Your Career and Skills First. Before diving into the stock market, it might make sense to invest in yourself by acquiring new skills or certifications that will increase your earning potential. This doesn’t necessarily mean returning to school for an advanced degree, which can be expensive if you don’t receive a stipend or scholarship. Consider affordable online courses, certifications, or networking events in your field. As a former athlete, the discipline and work ethic you’ve developed can help you excel in these areas.
Automate Savings and Investment. If you’ve set up a savings or retirement account, the easiest way to stay consistent is to automate your contributions. Start with an amount that feels manageable, even if it’s $25 a month. Automation ensures that you’re paying yourself first, which builds the habit of saving and investing, regardless of the amount.
Take Advantage of Available Resources. Look into financial literacy resources specifically designed for athletes, such as workshops or online programs. As a former athlete, you might have access to alumni networks or other support systems that can help guide you through these transitions. Consider consulting with a financial advisor who understands the unique challenges that athletes face when moving into their post-sports career.
Celebrate Small Wins. When you’re just starting, it’s easy to feel overwhelmed or compare yourself to others who are farther along financially. Remember, every little step counts. Celebrate small wins, like hitting your emergency fund goal or paying off a credit card. By building a strong foundation now, you’ll set yourself up for success in the future.
The expert recommendations for building a strong financial portfolio—saving, investing, paying off debt, and continuing your education—are all great in theory, but they don’t have to be tackled all at once. If you’re a former athlete entering the workforce or managing debt, focus on the basics: create a small emergency fund, pay down high-interest debt, contribute to retirement as you can, and invest in yourself and your career. Over time, as your financial situation improves, you can make bigger financial moves. Progress is progress, no matter how small.